TY  - UNPD
A1  - Brunnermeier, Markus Konrad
A1  - Langfield, Sam
A1  - Pagano, Marco
A1  - Reis, Ricardo
A1  - Nieuwerburgh, Stijn van
A1  - Vayanos, Dimitri
T1  - ESBies: safety in the tranches
T2  - Center for Financial Studies (Frankfurt am Main): CFS working paper series ; No. 537
N2  - The euro crisis was fueled by the diabolic loop between sovereign risk and bank risk, coupled with cross-border flight-to-safety capital flows. European Safe Bonds (ESBies), a union-wide safe asset without joint liability, would help to resolve these problems. We make three contributions. First, numerical simulations show that ESBies would be at least as safe as German bunds and approximately double the supply of euro safe assets when protected by a 30%-thick junior tranche. Second, a model shows how, when and why the two features of ESBies — diversification and seniority — can weaken the diabolic loop and its diffusion across countries. Third, we propose a step-by-step guide on how to create ESBies, starting with limited issuance by public or private-sector entities.
T3  - CFS working paper series - 537 
Y1  - 2016
UR  - http://publikationen.ub.uni-frankfurt.de/frontdoor/index/index/docId/41615
UR  - https://nbn-resolving.org/urn:nbn:de:hebis:30:3-416156
UR  - https://ssrn.com/abstract=2848283
PB  - Center for Financial Studies
CY  - Frankfurt, M.
ER  -